The European Parliament’s trade committee has signalled its opposition to an investor-state dispute settlement (ISDS) clause in the Transatlantic Trade and Investment Partnership (TTIP).

ISDS is controversial because it allows corporations to sue governments in international arbitration tribunals, bypassing national courts.

“A state-to-state dispute settlement system and the use of national courts are the most appropriate tools to address investment disputes,” according to a working document prepared by Bernd Lange, a German Socialist and the committee chairman.

The paper will feed into a draft report of MEPs’ recommendations to the European Commission. It is subject to change, but points to the committee’s possible position on the EU-US trade deal. Lange is the lead MEP on the report.

The Socialist and Democrats are not all opposed to ISDS, although group president Gianni Pittella has called for it to be ditched. The S&D will prove influential on the final decision, as it is the second largest group in the Parliament, and its MEPs are not as entrenched in their support or opposition as the other groups.

Lange’s report should contribute to the “fresh start” in the negotiations, now that the new Juncker Commission is in place, and after the midterm elections in the US, the draft said.

If ISDS provisions were included in TTIP, “further reforms to the current model are critical” to avoid problems that have hit existing free trade agreements, the document said.

“Investors abroad have to be treated in a non-discriminatory fashion and should have a fair opportunity […] to achieve redress of grievances. This can be attained in TTIP without the inclusion of ISDS provisions,” according to the draft.

The full European Parliament will eventually vote on the TTIP. A majority of MEPs will have to back the free trade agreement for it to come into force.

Lange has called for ISDS to be dropped from TTIP. Opponents argue that the clause has a chilling effect on regulation and will whittle away standards and regulations across a range of policies from the environment to food safety to social protection.

The US is keen for ISDS to be included in the final deal. But in January 2014, the Commission took it off the negotiating table after public criticism.

It set up an online ISDS consultation, which, from March to July, attracted about 150,000 replies. That is thought to be the highest number of responses to any Commission consultation.

At the time, the executive said it would analyse the replies before explaining the next steps it would take.

The Commission is expected to publish the results of the consultation this week, according to Friends of the Earth Europe.

88% of the participants told the EU executive they did not want ISDS included in the final pact, it said, citing a leaked document.

The consultation was built around twelve issues, including the scope of the investment protection provisions, transparency in ISDS, multiple claims and relationship to domestic courts, ensuring consistency of rulings and the appeal mechanism, and reducing the risk of frivolous cases.

The last question in the 44 page questionnaire asked respondents if they thought ISDS should be included.

Friends of the Earth Europe and other campaigners created easy to use online tools “to open up the process to the European public. But they are now concerned the executive will ignore the majority of the submissions (97%) because they were too similar.

“The complexity of the questions asked and the technical knowledge necessary to answer them represented a significant barrier for citizens to voice their concerns about ISDS,” Friends of the Earth Europe said. “It appears that the European Commission is attempting to downplay the overwhelming opposition to ISDS that their consultation found.”

Background

In June 2013, EU heads of state and government mandated the Commission to start negotiating a free trade agreement with the US, giving guidelines concerning what the negotiations should include.

The guidelines stated that the EU should seek to include provisions on investment protection and investor-to-state dispute settlement (ISDS) in the proposed agreement.

Negotiations for an agreement – the Transatlantic Trade and Investment Partnership (TTIP) – started in July 2013.

The EU executive consulted the public on its possible approach to investment protection and ISDS in the TTIP, asking whether the EU’s proposed approach for TTIP achieves the right balance between protecting investors and safeguarding the EU's right and ability to regulate in the public interest.

This consultation was extended over the summer on account of the high interest and the Commission intends to publish a report in early 2015.

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TTIP should be seen in a broader context of EU/US relations. In particular, it should take into consideration the growing impact of the externalization of US criminal law (whether anti corruption or anti terrorism) on european businesses (notably in the banking sector). The present situation is simply not acceptable for the EU side and should be settled before the signature of the TTIP. JGG

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Neil McMillan

13/01/2015 21:44

The EP draft report argues that ISDS in TTIP is unnecessary, and that state-to-state dispute settlement and national court action are sufficient alternatives. This may have unintended consequences. ISDS was introduced 30 years ago to avoid what are essentially commercial issues escalating into international political disputes. Requiring companies to demand that their government acts for them can often simply mean nothing happening: government lawyers have limited budgets and this can lead to justified action being blocked for that reason alone. National courts can be of variable quality, and regrettably sometimes swayed by local political or company interests. Many past ISDS… Read more »

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bettysenior

13/01/2015 22:05

Whenever we are in a perceived economic crisis (EU growth stagnant or regressive) our politicians make diabolical decisions and the TTIP will be the icing on the cake here for terrible decision-making. But the TTIP is something that is irrevocable (we can never come out of it once signed) and where the corporation holds all the economic aces when it comes to suing sovereign governments for profit and investments. Overall it is the most far-reaching trade deal ever and we shall be locked into for life. For if we ever tried to get out of it, every corporation in the… Read more »

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wvdplas

15/01/2015 06:10

Bernd Lange is being forced to change his opportunistic tune on CETA & TTIP. I do not believe a word this man has to say. He is one of culprits of having brought this whole plan in working. Bernd Lange is part of problem not the solution. All those in the EU associated with this sinister agreement should be taken out of their posts and replaced. They have proven themselves to be against any transparency ……..in spite of Mr Lange’s apparent conversion to being open……..because he knows everybody is now watching him. Out with these incompetent losers like Lange and… Read more »

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80341247

15/01/2015 12:58

Well stated and where the true corruption is through a small select lot who have hidden agendas behind closed doors. Usually that entails big business interests. There are not many senior EU executives I could trust, if any. I see Obama is wanting the trade deal to be seen as one of his legacies. Indeed I have been told by an insider that the primary reason that Cameron has gone to see Obama is to work out how they can get the TTIP through, fast-tracking it if possible. These people are deceitful people and one can equate them to the… Read more »

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80341247

15/01/2015 13:00

Restated due to an important word missed out ! Well stated and where the true corruption is through a small select lot who have hidden agendas behind closed doors. Usually that entails big business interests. There are not many senior EU executives I could trust, if any. I see Obama is wanting the trade deal to be seen as one of his legacies. Indeed I have been told by an insider that the primary reason that Cameron has gone to see Obama is to work out how they can get the TTIP through, fast-tracking it if possible. These people are… Read more »